France’s Highest Court Issues Landmark Reversal of French Case Law Regarding Standing of Creditors Challenging the Jurisdiction of French Courts in the Context of Insolvency Proceedings

July 13, 2009

In a landmark decision which has already received wide press coverage, on June 30, 2009 the French Cour de Cassation, which is the highest court in the French judiciary, accepted Gibson Dunn’s arguments and reversed a longstanding case law regarding creditors’ absence of standing in challenging the jurisdiction of French courts in the context of insolvency proceedings.

Until this decision, French courts ruled that creditors had no standing to challenge the opening of insolvency proceedings in French courts. The French Courts’ rulings were based on provisions of the French Civil Procedural Code.

In its June 30, 2009 decision handled under the visa of EC Regulation no. 1346/2000 regarding insolvency proceedings and Article 6.1 of the European Convention on Human Rights, the French Cour de Cassation ruled that creditors domiciled within a EU Member State different from the one where the main insolvency proceedings were opened may not be deprived from the right to effectively challenge the jurisdiction assumed by the court.

The direct consequence is that creditors domiciled in a Member State party to EC Regulation no. 1346/2000 other than France may effectively challenge the opening by French courts of main insolvency proceedings in favor of a company the registered office of which is in a Member State (other than France) party to EC Regulation no. 1346/2000.

The decision is not clear, however, as to whether this challenge is opened only in the context of French safeguard proceedings or also in the context of other French insolvency proceedings.

Gibson, Dunn & Crutcher LLP

Gibson, Dunn & Crutcher lawyers are available to assist in addressing any questions you may have about these developments.  Please contact the Gibson Dunn attorney with whom you work, or any of the following:

Nicolas Baverez (+33 1 56 43 13 00, [email protected])
Benoît Fleury (+33 1 56 43 13 00, [email protected])  

© 2009 Gibson, Dunn & Crutcher LLP

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